International perspectives

The global economy has been losing impetus since the middle of 2018. Global trading activity is restrained and accompanied by low growth rates and increased political uncertainty. The central banks have reacted to faltering growth by cutting interest rates. This environment is particularly challenging for a small economy such as Liechtenstein.

In 2019, the global economy posted its lowest growth since the financial crisis of 2008/2009. In general, a slight improvement is expected in 2020. Solid domestic demand is supporting economic activity in the developed countries, compensating for the weakness in world trade, as well as in the global industrial sector. In spite of the many political and economic uncertainties the stock markets remained remarkably robust in 2019, largely thanks to the interest rate cuts made by the central banks.


The coming year will be dominated by the presidential election. The current administration will have to ensure that the economic situation keeps voters in a good mood. Accordingly, the financial markets take a very optimistic view of the prospects for the US economy. Robust demand by private households continues to provide the main support for the US economy. An end to the loose monetary policy cannot be expected – if at all – before the middle of 2020.

Euro zone

The euro zone is heavily dependent on the global market. It has therefore been adversely affected by the trade dispute between the USA and China, the decline in world trade and global industrial production, as well as slackening investment activity in Asia. Economic growth in 2019 was at its lowest level since the euro crisis. Because of its especially large industrial sector, Germany was particularly hard hit. Private consumers, the robust employment market and rising wages are currently providing the biggest boost for the economy. The International Monetary Fund expects economic growth in the euro zone to improve only marginally in 2020.

Switzerland / Liechtenstein

US protectionism has significantly tarnished growth prospects in Switzerland. Following the 0.9 per cent achieved in 2019, the group of experts at the KOF Swiss Economic Institute expect a GDP growth rate of 1.3 per cent for Switzerland in 2020, and of 1.5 per cent in five year’s time. In Switzerland too, the drivers of economic growth continue to be private consumers and the favourable employment market. According to analysts, the biggest boosts to growth in 2020 will be provided by the pharmaceutical industry, trade and the financial services sector. Mega events such as the Summer Olympics in Japan will also have a positive impact on economic activity because the international sport federations domiciled in Switzerland book their licensing revenues in the country. On account of the persistent political and economic uncertainties, no end to the strong Swiss franc is currently envisaged.

Liechtenstein financial centre

The Liechtenstein financial service providers are internationally oriented and are therefore exposed to the slowdown in business activity and the decline in global trade. Nevertheless, the Liechtenstein Bankers Association remains confident (according to an assessment published in the “Government Financial Planning 2020 to 2023”). The positive trend, evident since the 2016 business year, continued in 2019. The banks now manage more client assets and employ more staff than before the financial crisis. According to the Bankers Association, the core challenges facing the banks remain digitalisation, negative interest rates, geopolitical conflicts combined with volatile financial markets, a shortage of specialist staff, as well as the scope and complexity of regulatory requirements.